tv Worldwide Exchange CNBC February 10, 2010 4:00am-6:00am EST
intensifies. >> and here in the united states, ben bernanke will set out the fed's exit plan today but will likely make jobs clear, we'll still be in the car for some time to come. >> and welcome to "worldwide exchange." i'm christine tan in singapore where it's 5:00 p.m. in the city. let's get a view of where the asian markets have closed today. a lot of hopes pengd on the european union. they might come up with a plan to bail out greece. the nikkei 225 is up marginally. toyota continues to be focused. that stock climbing despite anal announcement that it's recalling another set of cars. the shanghai market up more than 1%. a lot of positive comments out in the country about strong import data and export data and that's helping to lift sentiment in china. the kos pit is moving up flat.
people and investors are staying on the sidelines. the bombay sensex is trading down 0.5% and the aussie market is pretty much flat, up 0.2%. the ftse cnbc global 300 up 8 points, 4,243. ross, good to see you. >> hey, christine. we're very much focused on the who, what and when of the potential aid for greece at the moment. if it happens, who will provide jobs? what form will it take and when might jobs happen? stocks meanwhile, up a little firmer. up 0.5% for the xetra dax, a little less for the cac and smi. the ftse is not so firm. nicole, a very good morning to you. >> great morning to you, ross. in the united states, we are just a couple of minutes after 4:00 a.m. we're expecting markets to open lower. they are across the board right now. the dow is about 35 below fair value at this hour. the dow, of course, yesterday
sprang back above the 10,000 mark, gaining 150 points to end the day at 10,058. sprang back, as well. s&p futures down slightly and nasdaq futures are basically at fair value. but, of course, ross, the markets are going to continue to watch greece's woes here, as well. and let's talk more about that. the eu affairs commission has urged to help greece on bailout efforts. german officials said berlin would be forced to step in to fire wall any spillover from the greek debt crisis. a government spokesperson denies that any decision has been made. germany's finance minister will reportedly brief lawmakers today about the options. carolina, it's not clear, first of all, who gets to take this decision about aid to greece and then what form and when might
jobs happen? >> now, who is going to take in this decision is a fantastic question. if you think that we are going to have a number of people leading this eu summit tomorrow. the new president of the european council is going to be leading and providing this meeting. but the president of the european commission, jose manu well is going to be there, as well as the prime minister of spain who is holing the six-month presidency of the european union at the moment is going to be there. but we also have the 27 heads of state of the european union. angela merkel is very involved. we also also have the president of the european central bank, jean-claude trichet in this meeting. i'll let you guess, ross, who is going to be leading jobs? we'll have to wait and see. the question is not what they
will be presenting, but what can they present in the sense that the european union has claws, with so-called no bailout clause and that means that the european union shall not be liable for the commitment of a national government, which is exactly the case here. if you think that the greek government was responsible or is responsible alone to respect the rules of the growth and stability packet. so to keep its debt levels under 60% of the gdp on the sovereign debt and to keep its budget deficit no higher than 3% of the gdp, which jobs didn't respect, at least for the last five, maybe even ten years. the european union, though, will try to use another article in the lisbon treaty to go around this rule and to try to grasp the greeks with a bailout. >> and while we were talking to you, we have pictures of protesters strikes in greece.
we've had a lot of action in greece. more details in the freezing cuts in public sector wages, more detail in pension and form. the hopes will undoubtedly be that greece will get its own house in order and there won't have to be any loan guarantee. but if there needs to be, it's the simplest way to do jobs, a german intergovernmental loan. is that the simplest way to do jobs? >> that would be the fastest way to do jobs in that they wouldn't need all the 27 heads state to vote and approve jobs, which would be the case for a euro zeeb bailout would need all the 16 euro zone countries to approved jobs. but on the other hand, what i think is going to be happening tomorrow in this european summit is not necessarily a statement in the announcement of a bailout in the sense that we are giving greece credit of 20 billion euros or whatever it is. there will probably be a promise or a guarantee that the european
union or germany or the euro zone are going to be backing all the greeks debt and all the greeks' needs. so it's more in the sense of a bailout, not too much on the sense of a detailed bailout of where is this money coming from and how and when it's getting to greece. >> would they write a blank check, a blank insurance policy? would they go that far and say, look, we're not going to give you any money, but we will just guarantee any greek debt? >> i don't think they are going to sign a blank check, no. but they will put some sweet words and try to get the market to come down and trust that the european union is backing greece. >> carolina, we'll talk about this as we go through the show. for now, thank you. joining us now, we have asian chief emerging equity markets and he joins us live from congress long. aiden, good to have you with us. we've just just heard what
carolina was talking about, this bailout. if we get some sort of a package to recuscue greece, would that help markets here? >> we don't think you'll see a significant announcement on thursday. we've got greece, 4% of euro area debt, 3% of euro gdp. it's a relatively small problem. and as we've seen, let's say, a perception of contagion with cdss in spain and italy going higher, you've seen a flight to quality. so the funding costs have fallen and the euro has weakened. so the events going on in europe are ironic in greece are quite good for europe. the fear is that if you provide a back stop or a bailout too soon, that that would reduce the political pressure within greece
to pursue their physical austerity package which they've already announced. and so i think it's going to be very interesting, the dynamics of this. if you look at the maturity of greek debt, it's april that we need to get concerned about rollover risk rather than now. so i suspect this story is not going to be with us much longer and we're not going to see a imagine ek bullet on thursday. >> and if greece does deliver on its promises, then everybody's hopes will be fulfilled. but that is going to take us some time to figure out whether that happens or not. in that climate, how much risk aversion are investors still going to have? >> ross, when you say deliver on promises, really, what we're talking about here is the need for a dramatic reduction in government spending in greece, which clearly has an impact on civil servant salaries, on
social benefits. so it's got a very high political cost pursuing this. and the idea of providing some external help, whether it's the imf of the european union would be to buy greece a little bit more time for what is going to be a relatively unpleasant structural involvement. we saw in latvia, quite a substantial structural and it's that type of sacrifice that's required and this is why you need some external help just to mitigate the actual social impact of that. adrian, we've got plenty of issues to discuss with you, but you're going to be our guest host for the entire hour, so we'll bring you back in to analyze that. adrian is from jpmorgan. let's move on. >> some big stories making news around the world, christine, the second major winter storm in less than a week is slamming the
east coast today. more than a foot of snow is predicted for washington and new york. government offices in washington are closed again today at approximately $100 million of lost productivity a day. the ewe flighted nations has closed its doors today. congress has postponed all hearings, including the first on toyota's recall which has been moved to next wednesday. but fed chairman ben bernanke was supposed to testify, of course, at the house financial services committee today about the fed's exit strategy. but that hearing has been postponed. however, the fed will release bernanke's prepared remarks at 10:00 a.m. new york time and economists believe bernanke will discuss how the fed will tighten monetary policy, but won't discuss timing so the fed can remain flexible with economic conditions. didny's first quarter
profits were flat, although they still beat estimates. they were aid by higher advertising rates were offset by declines from its theme parks. those were hurt by a drop in attendance at disney land's paris, guest spending and u.s. ticket prices due to promotional discounts. second quarter bookings are currently down about 10%. in frankfurt, disney is up just slightly. still perhaps one of the happiest plane places on earth. >> toyota motor is once again in focus. the company recalling nearly 1,000 sedans to fix staerlg steering and braking problems. toyota's president akio toyoda says he may travel to the united states next week to discuss the
company's approach to fix the issue. meanwhile, honda announces recalls to fix faulty airbags. honda expects a total cost of the recall to cost between $223 million and $335 million. and shares of toyota closing up 0.4% while honda shares fell 1.6%. elsewhere, chinese exports and imports rose strongly in january from a year ago. data showed imports surging 85.5% while exports climbed 21% both broadly in line with expect ages. those gains led to a $14.2 billion surplus. a report in the state run china securities journal says that beijing should not allow any major yuan appreciation in the first half of the year. the front front page editorial says beijing will likely coordinate a rise in the yuan
welcome to cnbc's "worldwide exchange." this is the latest snapshot of what's going on in greece. the greece situation is a huge talking point right around the globe and it's having an impact on the fixed income markets. let's show you where bunds are trading today. the yield has nudged up 3.22% at the moment. the fact that there may be some kind of plan for greece has meant that we have seen yields and bunds spike up a bit. treasury, they have just moved down on the yield. three-year note sales posted a luke warm result, really, yesterday, christine. how are the currency markets looking. >> you know, ross, that talk of
greece getting past maybe some sort of an edge or bailout helped markets earlier. we have industrial production coming out in 15 minutes' time and about an hour later, we have the uk inflation report. we'll be all over that report. ross westgate will be. we'll be keeping an eye on it and analyzing jobs from here at "worldwide exchange." sterling/dollar trading at 1.5695. euro/sterling at 0.8770. and euro/dollar, 1.3767. nicole. >> it is a light day for economic data thanks mostly to the u.s. snowstorm that's hitting the east coast. the december trade deficit numbers will be out at 8:30 a.m. new york time. the gap is expected to have widened slightly to $36.8 billion. the federal government statement which was scheduled to be released at 2:00 p.m. has been postponed in the until a later dad date.
thursday's retail sales and business inventory data has been moved to friday. and philly fed president charles plosser was supposed to speak as well about lessons learned from the financial crisis and that has been reseld for next wednesday. richard fisher will be speaking about the economic landscape in dallas. fisher, though, is not a voter on the fomc this year. the "new york times" and wireless provider sprint nextel reports earnings after the bell. after the bell we hear from ictivision, allstate and prudential financial. ross. >> european stock markets have been up for two consecutive gains. slim gains again. 0.25% for the ftse 100, squat ra dax a little more. tim, slim gains this morning.
what do you make of sentiment right now? >> this morning, they've received some strength from the u.s. and asia overnight combining with some action on the greek story, whichever one is so clearly concerned about and that's driving the positive sentiment further forward in the short-term. but i mean, actually, the ftse hit almost 61.50 earlier this morning before falling back a little bit and as you quite rightly stated gn so far today are slim. so i don't know that there's been any great change in sentiment fundamentally. i think investors are concerned about the ftse being above the psychological mark. good to see the dow jones up from yesterday. so way too soon to say whether or not that's going to turn around and we're going to get back in a bullish mood just yet. fundamentally, i think the greek story will largely determine how people feel about that going forward. so kind of wait and see at the
moment. >> bhp billiton cautioned about the strength of the global recovery. does that impact their stock? >> yeah, definitely. the story on that stock price this morning was investors encouraged by the figures, the underlying numbers were pretty good. they beat expectations and the firm increased its dividend, so a positive note there. that encouraged investors first thing. but as you say, the outlook, they are pointing to kind of caution through this year and into next and as the trading sessions warn on, investors have responded to that element with the stock now trading down slightly. but perhaps of note today really on the broader market is the fact that miners are, in fact, what's driving the markets today where so often they are. but really, not determining the market movement today. >> tim hughes, thanks for that from ig index. the xetra dax is up 0.73% now.
a number of stocks are in focus here. fraport, airport stocks came out higher. we wondered whether e.on is going to be down. it is up 3.25%. morgan stanley is one of the other stocks currently in focus and it is absolutely flat at the moment. a big loser today in paris is arcelormittal. it's basically opening up some 5% after its earnings publications. maybe we haven't got that. arcelormittal is down in paris. also, sino if i is down. arcelormittal down 6%. we have an interview with the cfo of arcelormittal and that will be on the web, cnbc.com. what's going on in switser lynn? carolin schober has more. >> banks and insurers are
leading the gainers here in zurich. swedish shares are up roughly 0.5%. swiss reis higher by 4%. that was mainly on valuation for -- mainly for valuation reasons. but merrill also said that the full year earnings from that company should be fairly good. ubs also recovering from yesterday's steep losses, up 0.9% today. falling more than 5% in yesterday's trading after those disappointing outflows in the fourth quarter. as a result of that this morning, many brokers cutting their price target for ubs, still up 0.9%. >> and noble by care, what's happening with that stock? >> shares down more than 5.5% at this point. the company disappointed on the top line and profit for the company this quarter.
still, in terms of the outlook, the company said that the dental implant market may return to growing this year. jobs fell 7% in 2009. still, the company said visibility was very limited, soma may be a more cautious outlook than many had hoped for. but timely, let me update you on worse news from the swiss chocolate industry. swiss chocolate consumption fell for the first time in six years in 2009. >> it is strange and it's valentine's day this weekend and chocolate sales are down, which doesn't seem right somehow. okay. thank you very much, indeed. i'll sell you some chocolate, christine. >> that would get chocolate sales going up again. i require ten boxes, please, for the whole of my team in asia.
>> let's talk more with adrian mowat. i'll send you a box of chocolates, too, adrian. in china, that part of the global growth engine is still intact. does that mean the way global markets going forward is the way china does its exit strategy? >> absolutely. what strong export figures are telling you is that global growth is beating expectations. what china needs to do is to exit from these very aggressive pro growth qualities that it implemented in 2008. if you look at chinese property stocks relative to emerging market equities, they're down 45% relative since the first of july last year. so there is already some tightening going on with quantitative restrictions in terms of lending in china. and as we go through 2010, what we should expect to see is that
chinese growth will be less about fixed asset growth. jobs will be more about exports and consumption continue to go be healthy. but i think that has implications for commodities. jobs will be interesting seeing how arcelormittal shares were reacting today, even though jobs had good results. i think people are looking ahead and wondering whether the quality demand from china is going to be positive or negative. >> we'll continue to monitor that situation. adrian, you will continue to stay with us. coming up next on "worldwide exchange," chinese january exports rose less than expected from a year earlier. so is any appreciation of the chinese yuan a long way off? >> we keep talking about it, don't we? also, we have industrial production out of the uk. we'll get into analysis on that in just a few moments. %%%%%
toyota sxaned its largest recall ever. >> in the united states, ben bernanke will map out the fed's exit strategy today, but jobs will likely be clear that we'll still be in the car for sometime to come. >> you're watching cnbc's "worldwide exchange." christine tan, nicole lapin and ross westgate. the inflation data report will be coming out in an hour. first of all, to the industrial production data. we're looking for jobs to be up 0.2% on the month. down 4.1% year on year. that data is coming out now. manufacturing output up 0.9% on the month. that is stronger than the consensus of 0.3. industrial output was the one i just mentioned, up 0.5% on the month. we were looking for. that was down 376% on the year. the manufacturing output up 1.9% on the year. the o&s says the industrial output data implies an upward
revision of less than 1 percentage point. it is better than expected and sterlth just rallying slightly up to 1.57 against the dollar. sarah hewin at standard chartered bank, sarah, a little good data. >> yes, at least. the manufacturing data has been pretty poor in october and november. and he think partly contributed to the very weak first estimate for fourth quarter gdp. so this strong rise in december is very good news. it's suggested that there will be an upward revision to the gdp numbers, although it's expected to be fall. >> and talking about growth, we expect mervyn king to be very upat the beat on his growth revisions for this year. is that going to be right? >> well, if we look at what the bank of england was forecasting in its november inflation report, they were expecting quite a strong uplift to growth
by tend of next year. and we know that the economic recovery is coming through, but it's been a little weaker than we had expected. and certainly probably weaker than the bank of england had expected. chances are the growth report will be revised slightly lower. >> sarah, this is adrian from hong kong. do you think markets are underestimating the benefit the uk is getting from the weak sterling and how jobs still has a reasonably large manufacturing base that does care about the exchange rate? >> you're right right, the exchange rate is important. i think it's interesting that so far we haven't seen particularly strong signs that exports are building on the back of a weak sterling. in fact, the latest trade data showed that there was faster uplift in imports, which is holding the trade deficit relatively wide.
going forward, though, we would expect exports to become a bigger part of the economy. yes, exports are still important. >> sarah, stick around. jobs will be very important to hear what mr. bernanke said today. he won't be in washington itself, but he is due to give a report on the economic recovery. cnbc ftse 300 is up 12 points, 4 4,247 is where we stand. christine. >> optimism today is higher that a bailout can be hammered out for greece. the nikkei 225 is up 0.3%. toyota continues to be in focus. that stock climbing after jobs announced the latest recall of camry, sedans. the hang seng is up 0.7%. the shanghai composite up more than 1%. those good trade import and
export numbers coming out from china. in south korea, this market finishing up pretty much flat. investors waiting for the central bank meeting tomorrow. bombay sensex down 0.8% and the aussie market up slightly, 0.2%. >> meantime, christine, markets are lower in the i'd. narrowing slightly in the last half hour. about 30 below fair value after the dow sprang up above the 10,000 mark just yesterday, gaining 150 points. the s&p futures are down slightly. nasdaq futures are basically at fair value. ross, trading could be lighter as a new york stormy is expected to hit the brunt of jobs, at least, in the afternoon. >> absolutely. right. we'll show what's going on in greece. the stiex are under way today on government cuts planning to bring down the deficit.
sarah, i want to get your take on this situation. in some ways, we don't want an actual bailout too soon, do we? because we want greece to deal with its deficit. >> yes. there's always been an issue of moral acid ard if it was made pare apparent that the eu would step in with a bailout, that the greek authorities wouldn't make an effort to put their debt on a sustainable path. having said that, i think that the fact that the european commission halls approved greece's fiscal plans in the next three years, greece has shown it is taking stringent measures to reduce and stabilize the debt suggests that there is eu support for greece now. so to the extent that any problems greece were to run into as a result of market-driven concerns, then it's obviously more likely that the eu does
step in with a bailout. >> sarah, this is nicole lapin in the united states. we are expecting a fed statement out today, of course. what do you expect there? we're also getting improved outlook from the blue chip survey, saying that gdp will expand by 3% its low. but do you think that's reasonable? >> i think it's -- it's a little higher than we're expecting. we're certainly looking for gdp this year to be around a 2.5% pace. my guess is that bernanke will still be stressing that the economy faces serious head winds, that inflation is likely the stay low for quite some time. so in terms of setting out the fed's exit strategy, it's a case of sitting out what they will do, how they will approach the exit strategy, rather than signaling that they are going to be doing this anytime soon.
>> hey, sarah. i'm going to ask you a question about china and i know our guest host, adrian, will probably want to talk about this, as well. we have imports surging to 80% compared to 20% in exports. is this a sign that china is succeeding in rebalancing its domestic side? >> i think it is a sign and that's what we've seen over the past year or so. in the three years in the run up to 2007, 2008, the export sector was a very strong driver of growth for china. this really changed during the crisis. we've seen exports last year at negative broadly. so there is a sort of gradual return to export growth. but you're quite right, the import sector is booming, mainly, i think, on the impact from the project and
infrastructure spending, which is supporting growth at the moment. >> sarah, bringing the conversation back to the uk, we've got the inflation reports out this week. the uk has been monetizing much of its deficit, which is classic inflation generating activity. what are your expectations for the inflation report? and also, what are your expectations for the end of quantity taste easing in the uk? >> well, i think the bank of england is in an interesting position at the moment. of course, if we look at what's happening to inflation, it's spiking higher. it's likely to be a temporary sight higher. and this is what the bank of england -- the way the bank of england sees jobs. the question is, has the economy personally lost capacity? if so, then the risk is that inflation starts to kick in earlier in the economic upturn. than the bank perhaps had
originally thought. my guess is in the inflation report today, we'll perhaps see the inflation profile raised slightly, but nevertheless, meeting or coming in lower than 2% over the two-year time horizon. >> sarah, we have to leave jobs there. thank you very much for your insights. good talking to you. sarah hewin, chief economy at standard chartered bank. our guest host, adrian mowat will stay with us. we will keep talking about comments from the central bank eases fears about the exit strategy and its impact on the global recovery in just a couple of minutes. but before we go, here is a quick look at how gold is trading. down $1.05. $ $1075.15 an ounce.
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s. welcome back to "worldwide exchange." it's 5:42 in the evening in hong kong. dwek see the harbor for a change. i'm told it's 26 degrees, a little warm for a winter day, i think. let's find out what the weather is like in tokyo. let's check in on the trading day with ken moriyasu from the nikkei, moriyasu-san.
>> thank you, christine. it's much colder here in tokyo. as expected, automobile stocks were the most heavily traded. honda shares were weighed down by their announcement that jobs will recall 440,000 vehicles worldwide due to an air bag system defect. meanwhile, the nissan shares gained 1.6% after announcing last night an operating improvement in sales profit. mata motors says jobs plans to hire 16% of college graduates next year compared to this year. many of those jobs will be assigned to developing environmental technologies. domestic solar cell shipments doubled in 2009.
that makes japan's solar market the third largest in the world, up from sixth a year ago. >> staying on in japan, we have data today showing core machinery orders edged up almost two years in the october to december period, easing concerns about capital spending in the world's second largest economy. all eyes now on q4 gdp out due monday. for more on what to expect, martin schultz joins us live from tokyo. martin, always good seeing you. let me ask you about machinery orders up for the first time in two years. a report last week suggesting that companies were a bit reluctant to borrow. what does all this say about a corporate led recovery in japan. >> there is still cash left and they can invest. the question is when will they? and with machinery data jumping by 20% and you just heard from the nikkei report that there is
life in japanese industry, we are seeing a recovery here on the investment side for this year. >> what's the biggest risk facing japan's corporate sector this year? is it the fact that they're facing a sharp reduction or the fact that the yen is so strong? >> the yen is certainly strong, but it's hovering around 90. so we get bad news from the euro zone, bad news from the u.s., bad news from japan, you never know. it's around 90. this is a fundamental level corporations can live with. the problem we had was the adjustment to this enormous drop in global demand we have seen through last year. this is more or less digested at least and had been stabilizing and companies had been looking for the investment plans and forward into next year to do something more than they did before.
>> adrian, do you look for reason and optimism toni vest in japan or do you look for reasons to stay away? >> i think japan is quite challenged at this time. you have a nominal conjunction in gdp again. there is a lack of clarity with the government. we've seen some of the bellwethers in the japanese industrial sector both suffering from a strong yen, particularly versus the korean won and more recently, this issue with the recalls. so i struggle to get too optimismic about japan. i'd quite like to ask martin about the situation we have in greece. i think the public sector debt to ge ratio in greece is 105%. in japan, we're approximately 107% debt to gdp ratio. why are people not worried about the situation in japan?
>> martin, do you want to answer that? >> martin, do you want to -- >> excuse me? okay. the difference to greece is obvious. this is a major economy in contrast to greece. plus, earning power here is still very high and public debt in net terms, which is very important in japan because of the regional government and the overseas earning is much lower. so it's around 100. the problem in japan is, of course, the outlook, restructuring and domestic demand. in greece, the public sector is overstretched and a big bubble in real estate and so on. we don't have this here. we have major corporations still earning money and earning more this year. >> well, one corporation, martin, that is in trouble. has toyota's problems made
people question the quality of companies in japan at a time when the economy is so fragile? >> absolutely. now even toyota and honda, after we had so many shocks already in global demand plus in terms of innovation power of japanese corporations. now that quality has become an issue, this is a cornerstone of japan's economy. but when you look at jobs, usually such problems pop up during a crisis at the worst of time. but during a crisis for major companies, at least, it's also to fix jobs. there are spare capacities to fix these problems. pockets are still deep and we command when time is coming back. you can be sure that toyota and honda have overcome their quality problems. >> martin, what are your growth expect ages for this year both real and -- >> go ahead. >> sorry.
>> you already mentioned jobs. nominal growth will be extremely limited. jobs won't be negative when we get the quarterly figures for the last quarter of last year on monday. this will show about 3% and maybe a little. this is nowhere else coming back after this enormous drop. plus, jobs comes from cost cutting. so companies -- there is very little new demand. but jobs already helps to stabilize the situation. and what's important now is that investment is coming back, investment from major corporations. i see this from this quarter and this should help tremendously, including improvement in sentiment. >> martin, you're a popular man. everybody wants to talk to you. we have nicole, our guest host, ross and myself. thank you for being with us today. adrian mowat, from jpmorgan and our guest host will continue to stay with us. let's cross to adam now.
>> most of the asian markets ended up in the green. it's a choppy day for most of the trading day. we did see some pockets of strength coming from the steel sector, some of the big cat names such as posco helped to alleviate or cap some of the losses. and also the banking stocks, we got earnings out in some of the financial institutions there. surprise to the downside for kb financial with net profits slumping 59%. the bank did say their profits this fiscal year will likely go up three fold. mean while, the greater china region, jobs was a pretty solid day in china. very thin volumes.
in fact, volume styles were at 11-month lows. but the number of stocks outweighing the number of loose gainers and the ratio. so it was pretty positive, also. banking stocks were broadly higher on the back concerns were dissipated somewhat from the comments and the pboc governor saying, christine, that they expect inflation to be relatively moderate and bank lending in china was relatively stable. but one of the top performers has been the taiwan market. >> interesting. do you know what is happening there? are people getting excited about the links between china and taiwan, for instance? >> they are, actually. and we're expecting a press conference regarding cross border efforts between china and taiwan, which has been a very difficult point for the policymakers to embrace here. and it looks like they're going to be liberalizing across the a variety of sectors, including the technology sector. they're going to allow a little
bit more freedom for the taiwan he's chip companies to invest in china. the only caveat is they have to keep core technologies in taiwan and increase their investments at the same time in taiwan. that will spill over to the lcd sector. analysts are saying that the big concern for taiwan he's companies is they need to remain competitive. we've got chip companies such as intel opening up aed 2.5 billion plant and there is this element of competition, of course, in terms of pricing and the taiwan he's need to be more competitive. now, they're looking at expanding that to the insurance and security industries and in the banking sector which has been a contentious issue. jobs looks as though liberalization is driving gains in the last few days. >> thank you very much for that, adam. now let's cross lime to mumbai. reema tendulkar join us live for
the indian business report. >> it's now down nearly 7% for the nifty and the sensex. the 4800 mark has clearly acted as a supply zone repeatedly for the markets. now the nifty is quoting at the 7550 mark. for the greater part of the day, they were holding up smartly in the green and, in fact, had a gain of 1.5% going for them. but now, in the last few minutes of trade, they have, too, have dipped into the red. the small cap index is absolutely flat on the losing side. most of the sectors are under pressure, so we have a couple of metal counters, m&m in the auto space, ongc in the oil and gas space. so a lot of diverse sectors are under pressure. but on the gaining side, it's just some gains coming in for the derivative. up about 2%.
>> reema, i understand also there's a government meeting on a possible hike in fuel prices. what are analysts telling you? what are they expecting to hear? >> this is clearly from source base. remember, recently, the committee had summited their recommendations on the oil and gas space while asked the deregulation of both pet roll. now we understand that the oil ministry will be delivering this regulation to the panel core committee today and tomorrow. what we were learning is that perhaps there will be a fuel price hike. with that, eats back to you. >> reema, thank you very much for that, ream na tan due ka. in china, stocks got a lift. inflation remains at a low level, which means tightening measures may not be implemented
soon. strong import/export data bolstering hopes that trade will continue to recover this year. for more on what's golg going on, let's get back to our guest, adrian mowat from jpmorgan. adrian, how big a risk is inflation in china? >> it is the meaningful risk. we think inflation will continue to rise until maybe july. obviously, the renminbi hasn't moved versus the u.s. dollar. uncomfortable, with i find the ch story on a medium term view. but for near term, it's going to hit sentiment. >> how is the central bank going
to control that inflation? could they, for one, tighten even more or could they, in other ways, let the currency appreciate? >> it's very interesting. in the developed world, we have this thing quality quantitative easing and in the developed world we have this things called quantitative restrictions. what else there but in on her currencymakers, the markets are strict. if they're concerned about asset inflag, they will restrict marketing, they have a fair amount of control of what's going on within that economy through the banking sector. and i think what you will see is an impression that there's not much tightening going on because interest rates aren't moving. but, in fact, there is a removal of the easy monetary environment in china, as you will see, and other emerging markets. >> so can china avoid a hard
landing? >> our base case is we think china will avoid a hard lappeding. what you are going to see is a slow down in the high rates of growth and fixed asset investment. you will see stronger exports and an ongoing good story with consumption. but that rebalancing may have an effect on commodity markets as people extrapolate today's very high level of demand and, in fact, that's not what continues. >> adrian, we'll have to leave jobs here for now. thank you very much, adrian mowat, equity strategist at jpmorgan. nicole. >> and christine, you can, of course, get updates on the website anytime, day or night. you can also find the oracle of omaha. but is warren buffett plain lucky? we will talk, of course, to the author of black swan. you can check that out on the website. on a different note,
valentine's day is just around the corner. so maybe you're feeling a wee bit romantic. and if you're looking for inspiration for a getaway, check out this slideshow of the ten most romantic homes. again, it's cnbc.com, christine. i like that villa right there. i don't know where it is, but i like jobs. >> you know, i can't remember the last time i celebrated valentine's day. it's been a long time. i kneed need to have a word with my husband. chocolates, ross is sending me some. maybe he'll send you some, as well. we'll see. >> greece is facing a strike on speculation that jobs could get an eu bailout package. more on that shortly.
a airbags a day after toyota has its largest recall ever. >> nice to have you with us here on "worldwide exchange." i'm nicole lapin. it's 5 on the nrng morning on wall street. welcome to the start of your global day. futures are lower across the board right now. the dow is down about 13 below fair value narrowing slightly in just the last hour or so. after springing back yesterday above the 10,000 mark gaining 150 points. now, trading could be lighter, ross. he's expected to feel the brunt of the storm in the afternoon. >> nicole, we're two hours into the trading day in europe. 0.75% higher for the cac 40 and
smi. undoubtedly, there's a little bit of sentiment improving. those hopes may be slow. whether we get some money given is a different matter, but there will be indications coming out from the euro zone. how and who makes that decision is still fairly unclear. we have quite a bit of falls off from arcelormittal, the steel minor today and they're down 6% at the moment. they along with bhp billiton has been talking about a slowdown. >> and as far as asia is concerned, that slowdown in china was put in the back burner. china got good import/export data. this is how the picture is looking in the currency markets. dollar/yen, 89.63. the sterling getting a bit of a
lift because we had industrial product data coming better than expected for sterling. it's up marginally against the dollar. we are expecting, of course, inflation data coming out in half an hour's time. we'll be all over that data here on "worldwide exchange." and euro/sterling, 0.8753. ross. >> jobs will be interesting for the bank of england to tell us how they view the economy coming out. joining us now is john hanes and adrian mowi a t is still with us, as well. john, as an investor, when you look at the risk there and as a political decision has to be found, what does that make you do with your investments? how much more risk averse are you as a result of what's going on in greece? >> i think it's a reminder that the systemic risk is not entirely gone. i think jobs will be dispelled
over the next two or three months as i think that a solution will be found that will enable greece to take their medicine and people to regain some confidence if you like in the structure of the sovereign bond markets. so i think all in all, we'll get to a point whereby people's risk aversion and risk expectations will be appropriate. >> what do you do? >> at the moment, i think the only option is cash and cash equivalents. where we are is the sovereign risk which underspreads the corporate bond spreads, as well. so it makes guilts and corporates a difficult place to be. in terms of equities, if this is a systemic problem that is yet to be resolved, then that has a knock on effect in terms of the stimulus that comes through the economies and withdraws monetary stimulus and makes people more risk averse in their business decisions. again, that's not great thing for equities. and finally, we're coming to terms with the fact that maybe
anyway we've begun to confusion volatility with momentum. so i think we've got okay growth. by the middle of the year, we will have redone the pricing, but not until then. >> cash or cash equivalent, does that apply to those sitting in hong kong? bearing in mind that whatever the economies might be doing, markets are around the world linked. >> we've got a macro risk premium driving all risk assets, whether it's credit markets, equity markets or commodities. that's a global event. i concur with the view that you're better off with cash or cash equivalent when you've got this macro stress going on.
what i see here is that we're seeing fiscal deficit sooner than most people were expecting. and now with this issue in greece, i think the pressure will be on governments to show that they're going to bring fiscal deficits under control and that is clearly negative for growth and that has an implication on equity markets which are growth dependent. >> yeah. my problem with that is waiting for governments to get in control. it's a fairly nebulous timing and there's no definitive point, is there, which marks, okay, fine, they've got that problem under control. so we could be wondering about this for months, if not the whole year or two two years. >> it's possible. and what adrian said, quite rightly, it's been taken out of government's hand about when these make those decisions.
what's happening in the bond market is saying, we're not waiting for you, we want your fiscal discipline sleeping. >> what would investors would you be looking to make? >> i'm a believer in subpar growth, but not no growth in the next few years. >> john, thanks for that, john haynes. are we saying good-bye to adrian now? no. you're going to stick around for even more. adrian, thank you. let's update you on some of the top stories we're following a lot around the world today. the second major storm in less than a week is slamming the east
coast. government offices in washington are closed again today at a cost of roughlyed 100 million in product productivity per day. airlines have canceled hundreds of around the united states today. congress has postponed all hearings, including the first on toyota's recall, which has been moved to next wednesday. fed chairman ben bernanke was supposed to testify by the house financial services committee today about the fed's exit strategy. but that hearing is postponed. however, the fed will release the remarks at 10:00 a.m. time. >> nicole, still to come database actually, i've been -- i was wrongly corrected earlier. adrian, we are going to let you
european stocks are firmer ahead of the u.s. open right now. we've had gains of nearly 1% for the ftse 100. xetra dax and cac 40 up 1.3%. a bit lower for the smi. banks and commodities are a little more firm. icap recovering from heavy losses that we saw at the end of last week. autonomy is off this morning on some negative reports. let's get other to carolin with more on that market. what's happening with financials there? >> yes. financials are leading the smi higher. along with the insurers. the smi is up almost 1% now. so gaining some strength in the last hour. but analysts calls are what seems to be calling those higher.
up 1.8%. many analysts coming with upgrades or price target increases this morning after stellar earnings yesterday. a similar was the case for swiss re. merrill lynch upgraded that stock from underweight to neutral. credit swiss, the biggest gainer, up 3.3%. that company is out with its full year earnings tomorrow and we are expecting a fourth quarter net profit of 1.3 billion. ubs yesterday fell mover than 5% at the close base the big disapoint over that accelerated. up 2.2%, as i speak. let me mention dental implant maker noblebuy. the company missed expectations both on the top and bottom line here. net profit was down 31% in 2009 and the outlook was relatively
cautious for 2010. with that, let met send jobs over to adam in singapore the. >> thank you very much for that. let's take a greater look at the markets for the trading day. one of the best performers was the taiwan equity markets on the expectations that we would see further investment. just breaking the wires, we've got an official announcement from china saying they are releasing markets in china. however, they are restricting the same type of tenl. overall, we're seeing a relaxation in these investment rules. the market had anticipated that because we had had comments from government officials saying they weren't expecting that announcement to come sometime this evening. in the broader picture, they are discussing to relax the investment rules across the financial sector, as well, which
could include the securities sector in terms of the brokerage, the insurance companies and also the banking sector which has been the biggest stink sticking point in terms of the discussions here. so the taiwan equity market managed to finish up by 1.1% today. remember, it is a public holiday and will resume trade on the 22nd of february after the chinese lunar new year holidays. the shanghai composite ended firmer today. we have comments from the pboc governor saying bank lending is relatively stable and inflation, while edging up, is pretty much under control. on that note, back to you in london, ross. good morning. >> adam, thank you very much. good to see you. still to come within we'll get the bank of england's latest story this morning.
moving higher in the last hour or so. the dow is up about 20 points, 15 points above fair value right now after springing above the 10,000 mark yesterday. s&p futures sprang back, as well. nasdaq and s&p futures are above fair value slightly right now. but it is a light day for economic data thanks mostly to a big stormy that's hitting the u.s. east coast. the december trade deficit numbers will be out at 8:30 a.m. new york time. the gap is forecast to have widened slightly to $36.8 billion. the federal budget statement has been postponed until later that day. retale sales and inventory has been moved to pri. dallas fed president richard fisher will be speaking about the economic landscape for 2010
at 1:20 p.m. in dallas. fisher is not a voter on the fomc this year. the "new york times" and wireless provider sprint nextel will report earnings before the opening bell and after the bell we will hear from activision blizzard, maker of the world's top selling video game as well as insurers allstate and prudential. ross, of course,well be watching the greece situation here in the united states, as well. >> absolutely, nicole. talking of that, the ei affairs commissioner has urged the world to help grease on the eve of the summit. a government spokesperson denied that any decision has been made, but germany's finance head will brief lawmakers about the options. the government has got fresh
measures to cut public spending and raise taxes. for more from athens, we're joined now by the bureau chief at the dow jones news wires. in terms of greek strikes, today, how meaningful or big in it? >> jobs will be a key measure of both the government's credibility and the union going forward. how tough are the measures? how much are the unions willing to accept? in a broader context, the strike so far has disribted a fair amount of public services, airports, schools, hospitals, that sort of thing. the protests happening right now is fairly medium sized by greek standards, even a little bit on the small side. there are several thousand workers marching into the center still, but it's very quiet. >> who do these people plame for
the problems greece is in? do they blame the government or do they blame outside agents? do they blame the euro scope, speculators? >> well, that is a fair question. i think there is a growth relows from greece. but there is a fair amount of speculators going back two years ago. i was just talking to a 58-year-old school teacher who with said exactly that. it's not a game for us. this sour real life. >> okay. thanks for that insight. let get more. joining me now in the studio, a visiting research scholar at the helenic school of economics. what the population thinks is going to be quite crucial here. advertisest way to resolve this
crisis is the greek government delivers on its promise of austerity. do you think they will be able to do it? >> they will have to because this is the crunch. i think the feeling is behind them, either sth this way or the grease side of jobs, and this is not the case of grease pt. this guess us something like 65%, according to a recent poll greeks think that's measures are warranted. if you add up up the socialist government, jobs amounts to 80 something percent of the greek constituencies. so they have a mandate. >> here is the thing. you say they have to do jobs. can they do it without financial assistance from someone else within the eu or someone else
from within the euro zone or some kind of package? >> well, a large segment is they have to do jobs alone. in other words, they have to cut down on spending. the other thing is whether jobs will be a euro bond that will save us. there's no third solution, i think. >> well, germany could come in and just give them a loan. >> that would be the worst, i think. >> why? >> because any loan doesn't solve our problems. we will wake up after the loan is over and we will still be in the same position and even worse. so my way of seeing things is we will have to face the music this time. >> why are markets reacting now, if markets had long known about greece's debt issues? >> well, markets react when the bad news are out.
i think usually there's a time lag between reality and what the markets do. and probably, this is why they're reacting now. >> you talk about the prospect of imf. that would be the last thing leaders in the ur he row don't don't want to do. >> i don't see that happening. that's true. most will see an imp bailout as something that will prove the imagine ix over the quantitative improvement for mob tear policy defaulting. >> how long -- how much longer can we give the greek government? how much pressure is there to starting meaningful cups being delivered without this -- well,
how long have they got? >> well within i think until the summer. i think the determine will tell whether we are out of this crisis or not. >> thanks very much, indeed, for joining us. >> thank you opinion. we'll take a short praek. still to come, the uk is releasing its report on that. we'll get more on that with the reaction.
welcome to "worldwide exchange." the headlines making news today, in the united states, ben bernanke will map out the fed's exit strategy today, but will likely make jobs clear, we'll still be in the car for sometime to come. >> meanwhile, here in europe will they or won't they bail out? jobs looks more likely for greece as the chatter intensifies. >> and here in asia, honda recalled 440,000 cars globally for faulty air bags just a day after rival toyota expanded its largest recall ever.
>> nice to haver you with us here on "worldwide exchange" on this wednesday. markets just moved slightly higher in the united states. the dow about 20 above fair value right now after springing up 150 points above 10,000 yesterday. the s&p up slightly, as are the nasdaq futures. of course, ross, markets will be fixated on fed chairman's ben bernanke's statements that come out in just a few hours. >> yeah. meanwhile, right now, nicole, we're about to start getting some flashes out of the bank of england's inflation report. ahead of that, european stocks, quite quite at a session high, but nevertheless, they're doing fairly well today. we are firmer. banks, utilities are driving us up. this is the picture from where mervyn king will start addressing in a few moments time. and it is worth pointing out, we are very interested in what's
going on in greece. different rumors swirling from german and french governments about whether there will be any kind of agreement in an aid package for greece. they would probably indicate a pull without putting any concrete measures. let's listen in to what mr. king has to say. >> although a gradual recovery and output may now be in prospect. there are signs that many economies are on the mend, although much uncertainty remains about the likelihood of a sustained rise in real final demand in the world economy as a whole. at home, the tail winds of an enormous policy stimulus and the depreciation of sterling are meeting the headwinds created by the balance sheet adjustment of the damaged banking system.
spare capacity will press down on inflation in the medium term. but the near term outlook for inflation is for jobs to rise further as the restoration of the standard rate of vat to 17.5% and higher petro prices impact on the cpi measure of inflation. while the banking system reduce is its leverage, there will continue to be downward pressure on the supply of credit to households and businesses and on monetary growth. the 12-month growth rate of broad money, sclusing intermediate financial companies slowed further to around 1%. but because asset purchases injected additional money into the economy, money growth is stronger than jobs would otherwise have been and asset prices have picked up. since their troughs last year, equity prices have risen by
about 50% and both commercial and regional property prices have increased by around 10%. it's also reassuring that total money spending has begun to grow again after the sharp falls at the beginning of last year. inflation has risen sharply, as expected, from its trough of 1.1% in september last year to 2.9% in december. reflecting higher pet roll price inflation. although the exchange rate has been sharply stable, it's still feeding through to consumer prices. the january figure for cpi inflation is likely to have exceeded 3% as the effects of
the restoration of v.a.t. to 17.5% head through. this will pe the third episode when inflation has temporarily moved above the target by more than 1 percentage point. on both previous occasions, the mpc said inflation would come back down, and on both previous occasions, jobs did. and the mpc expects this to be the takes that time, too. monetary policy can do little to affect these short of inflation, rather wibt affects the path of nominal spending. and that, relative to the supply of the economy determines inflation in the medium term. the strength of both the tailwinds and headwinds affecting spending are
uncertain. so it's hard to be sure how sustained the recovery in spending will prove to be. it's perhaps even harder to judge the impact of the financial crisis and last year's downturn on the supply of the uk economy, both in terms of magnitude and pure cystance. nevertheless wibt seems clear that at present, there is significant spare capacity in the economy that will act to bring down inflation. so chart one on page six of the report represents the committee's best collective judgment on the range of outcomes for fourth quarter gdp growth, assuming that bank path implies market interest rates and that the stock of purchased assets, financed by the creation of central bank reserves, remains at 200 billion pounds through wrought the forecast period.
the considerable stimulus should underpin a recovery in economic activity. but that will need to work against the headwinds from the banking system and the need to strengthen the public sector finance. overall, the outlook for gdp growth is similar to that in the november report. within that big picture, the pace of recovery is somewhat less strong than three months ago, but the committee believes that the downside risks are on balance now less pronounced. chart two on page seven of the report shows the level of gdp derived from the growth projection shown in chart one pt and it shows that despite the recovery in economic growth, output is unlikely to return to a level consistent with the continuation of its precrisis
trend. for a considerable period. >> you're listening to mervyn king, the governor of the bank of england laying out his latest growth and inflation forecast. sterling has paired its gains against the dollar and euro. essentially what mr. king is suggesting is that inflation at the moment is going to be much weaker than markets forecast based on where current markets think interest rates are going to go. so the suggestion is that interest rates are going to stay longer than many predict and it may not rise until the end of the year at the earliest. they say the economy mr.
recovery slowly taking around mid 2011 to return to its precrisis levels with gdp seen around 3.5% in two years' time. they say it's going to be a very short-term phenomenon. let's get some reaction to that. phillipe, the tone of this, anybody thinks we're going to get any interest rates earlier this year are mistaken. >> yeah, i probably think so. and i think the analysis of mr. king is making is very correct. inflation in the short-term are sticking up a little bit, but still, deflation in the longer run especially with what is happening to the other counties is mainly with this hiking interest rates now, soon rather than later. because i think in many countries, jobs will be slower in the second half. this would create some sort of
double dip. >> okay. it's an interesting move, when we listen to the bank of england government, we're going to get texts, as well, today, peter. this we're looking to see what he says about withdrawing the special measures. so how will that tie in with the sentiment from mr. king? >> well, this is going to be interesting because they're talk about the bump up in commodity prices and talking about maintaining an easy policy money, which i think bernanke is going to have to wean the american system off of. it's all these different sides of the kainl same coin. pass et bubbleses that we're seeing in terms of fuel prices is fueled by the empty money. we've seen jobs in industrial metals such as copper and gold and others just in the last 12 months. so if they don't find a way to start to drain this liquidity out of the system, it's essentially going to feed the fire of commodity inflation
pushing its way through the system. so it's going to be a very dell accountant cat dance they have to do here. at the same time, the treaty is a bailout. so it will be a liquidity injection that sort of holds the euro together for the foreseeable future. so you'll you'll balance all these conflicting issues is going to be a delicate, dell prat cat operation. >> peter, markets are definitely watching. yesterday we saw a big surge in markets. the dow is up about 230 points at one point. and then drew back, still closing the day higher. why didn't those gains hold? because we don't have enough proof that the economy is fundamentally fixed itself, that we are seeing in demand growth a lot of what took place looking at the ism data is inventory restocking. hopefully the end demand is sufficient to washt not only
that, but continued increases in production. but the evidence on that is still sketchy. and so to drive stock prices higher on the belief that that is happening is payrollus in here. there is fear back in the marketplace, which is, at the end of the day, a healthy thing to have. >> so what proof or catalyst do we need for markets to move higher from here? >> we need to see very solid progress in terms of order backlogs growing inspect aggregate, but in key industries, as well. manufacturing, technology to start off with. we also need to see progress on the consumption of things such as electric utilities, kilowatt hours, the output from refineries, we need to see that increasing. drown dawns in inventory of petroleum stocks. those are the kind of hard numbers that when we see those happening, we'll know this is la
legitimatement. >> phillipe, do you go along wa a that? >> totally. so the only surprise i have is that the correction starts today, this year. but it's clear that we still have to work off quite a bit of excesses and, therefore, i think that the remainder of 2010 for equities remains very challenging. >> very challenging, indeed. phillipe gijsels, from fortis global markets, we thank you for your time. peter sorentino, a senior portfolio manager at huntington asset advisers, i'd love to continue the conversation with you in just a bit.
road. a new index which measures fuel purchases by commercial truck drivers slumped in january. the pulse of commerce index was created by payment processing firm saridian and the ucla school of management. jobs anticipates shifts in economic growth as jobs shows when and where the rise and fall of shipments of raw materials and goods are taking place. real estate site dillo.com says they owe more on their mortgages than their health is world. zillow says home values fell for the 12th straight quarter, but expects prices to bottom out in the second quarter of this year. u.s. consumers rose modestly. mastercard spending pulse unit saels says sales rose 376% versus 4.8% in december.
shoppers pulled back on discretionary items like electronics, but did buy clothes last week. >> and we've been talking about at the u monetary affairs commission. leaders have been urged to help greece. a possible rescue intensified after a german official said berlin would be forced to step in to faire wall any. the finance minister in germany will reportedly brief lawmakers today about the options that they have. >> ross, mining giant bhp billiton is signaling a sustained global economy after reporting its weakest first half profits in four years. nevertheless, net profits came in at $6.1 billion, beating markets forecasts and 24% stronger than the previous half.
bhp sounded caution about the pace of monetary tightening in china, its biggest customer and would jobs could do to the global recovery. >> clearly the world global economic outlook st better than jobs was in mid 2009. however, what we've made over the last couple of results periods, which is that the economic recovery will remain fragile and the duration protracted, we see no reason to change that outlook statement. >> bhp shares, meanwhile, ended flat in sydney in london right now. it is trading just about 0.5% higher. nicole. >> are you feeling psychic this morning or this evening, christine, or perhaps extremely lucky? log on to cnbc.com and play our newest game called the close. input your guess for today's
closing price by noon new york time and come back to see if the market closed around your prediction. and if it does, you're the winner. up next, trade deficit data will be a key factor to watch in today's trade. stay tuned for more on that and everything else you need to know to stay ahead of the game. i was just in town for a few days, and i was wondering if i could say hi to the doctor. is he in? he's in copenhagen. oh, well, that's nice. but you can still see him! you just said he was in... copenhagen. come on! that's pretty far. doc, look who's in town. ellen! copenhagen? cool, right? vacation. but still seeing patients. oh. [ whispering ] workaholic. i heard that. she said it. i... [ female announcer ] the new office. see it. live it. share it. on the human network. cisco.
welcome back to "worldwide exchange." it is a light day in the i'd thanks mostly to that snowstorm hitting the east coast. the forecast has widened slightly toed 36.8 billion. the federal budget statement, which was scheduled to be released at 2:00 p.m., has been postponed until later in the day. thursday's retail sales and business inventories data has been moved to friday. let's bring back in peter soren tino, senior portfolio manager at huntington advisers. peter, before the break, ur mentioned we are all watching the fed statement coming out today.
cheap money means asset bubbles, you said. where are those asset bubbles? >> in all the base meltses we saw huge price necessary copper. brazil was up in dollar terms almost 200%. if you saw momentum last year in any segment of the u.s. stock market, jobs tended to perpetuate even more buying. so if you look at some of the strongest performing groups last year in the u.s. market, technology, some of the financial sixtier was those will probably experience some pullback now as investors who did that. with cheap money, leverage is the way to go. we've gotten the original shot across the bow now, as far as that goes, but we'll see that play out now as the markets correct themselves and get back to realistic valuations.
>> of course, markets will be watching the fed statement coming out today, but markets are also watching the greek debt situation. halls greece taken on an added weight in the united states because their problems make us nervous about our own uncontrollable budget issues. >> yeah, jobs does. there's a very interesting parallel there. jobs becomes sort of the canary in the mind, if you will. i think our guests pointed out, there's a domino effect because they're not that different than several of the other countries. i think they're calling jobs club med now to describe that group of troubled credits that could easily sort of begin to fall off. if the situation with greece can't be resolved. so we're all in the same boat. lack of fiscal discipline, there's a provides to pay for that.
so, you know, the party is over. >> well, let me ask you about the party. it is reported that big banks in the united states have only about 5% of foreign exposure in club med. some people call jobs p.i.g.s. do you buy that number, though? it's a lot less than people thought. >> it is a much lower water. but again, that's direct exposure. those banks, no doubt, have customers who are doing business in those countries, chor who have export orders. so the numbers probably are a couple times larger than that. because customers in those countries are going to have problems settling transactions, whether they're financial, exports, imports, whatever. there's going to be a hailo effect that will kick out if, in fact, that situation can't be resolved to the satisfaction of everyone involved.
>> and you were telling me before that last year the dollar was the currency. this week, we heard a report out from the largest store position in the euro. is that the currency to hate right now? and are the dollar and the euro being traded off each other somebody? have you been seeing that? >> there is a bit of that. some of that is because we've monetized everything or secure advertise e ized jobs, i should say. so money tend to, and the leverage tends to exacerbate these movement. so last year, everybody hated the dollar, shorted, go long everything else. now we're seeing the reverse of that. again, i think the comments from the fed about a week as was basically a large margin call. so, you know, those that are getting out overall did miss the earn signs on that one. so it is a bit of a scramble to